Glossary
Value added tax -a tax charged on supplies of goods and services made by a taxable person in the course or furtherance of a business
Taxable person - any person (ie sole prop, partnership, limited company etc) who is registered or liable to be registered for VAT because they make taxable supplies over the VAT registration limit
Supplies - anything done or given in return for a consideration, ie sales of goods and services or barter transactions
Outputs - supplies made ie sales of goods or services
Output tax - VAT on taxable supplies made
Inputs - supplies received ie purchases and expenses
Input tax - VAT on taxable supplies made
Taxable supplies - supplies that are liable to VAT at any rate, ie 17.5%; 5% or 0%
Exempt supplies - supplies that are not taxable and are listed in the legislation as exempt from VAT
Exempt input tax - input tax on the cost of goods and services used to make exempt supplies
Partial exemption - when a business incurs VAT on inputs that are used to make both taxable and exempt supplies